Tax calculations for each of the following cases, determine the total taxes resulting from the transaction. Assume a 40% tax rate. The asset was purchased 2 years ago for $198,000 and is being depreciated under MACRS using a 5-year recovery period? a. The asset is sold for $217,800. b. The asset is sold for $148,500. c. The asset is sold for $95,040. d. The asset is sold for $76,000. Calculate the firm's tax liability for each case: (Round to the nearest dollar.) Total Sale Price 217,800 $ 217,800 $ Capital Gain Tax on Capital Gain $ Depreciation Recovery $ Tax on Recovery $ $ $ (Round to the nearest dollar.) Sale Depreciation Tax on Total Capital Gain Tax on Capital Gain Price Recovery Recovery Tax 148,500 $ (Round to the nearest dollar.) Sale Total Capital Gain Tax on Capital Gain $ Depreciation Recovery $ Tax on Recovery Price 95,040 $ Tax $ $ D (Round to the nearest dollar.) Sale Total Capital Gain Tax on Capital Gain Depreciation Recovery Tax on Recovery Price Tax 76,000 $ $ $ $ [ 2: Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year* Recovery year 3 years 5 years 7 years 33% 20% 14% 45% 32% 25% 15% 19% 18% 7% 12% 12% 12% 9% o o AwN- 10 years 10% 18% 14% 12% 9% 5% 9% 8% 9% 7% 4% 6% o o 6% 6% 11 4% Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention. Tax calculations for each of the following cases, determine the total taxes resulting from the transaction. Assume a 40% tax rate. The asset was purchased 2 years ago for $198,000 and is being depreciated under MACRS using a 5-year recovery period? a. The asset is sold for $217,800. b. The asset is sold for $148,500. c. The asset is sold for $95,040. d. The asset is sold for $76,000. Calculate the firm's tax liability for each case: (Round to the nearest dollar.) Total Sale Price 217,800 $ 217,800 $ Capital Gain Tax on Capital Gain $ Depreciation Recovery $ Tax on Recovery $ $ $ (Round to the nearest dollar.) Sale Depreciation Tax on Total Capital Gain Tax on Capital Gain Price Recovery Recovery Tax 148,500 $ (Round to the nearest dollar.) Sale Total Capital Gain Tax on Capital Gain $ Depreciation Recovery $ Tax on Recovery Price 95,040 $ Tax $ $ D (Round to the nearest dollar.) Sale Total Capital Gain Tax on Capital Gain Depreciation Recovery Tax on Recovery Price Tax 76,000 $ $ $ $ [ 2: Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year* Recovery year 3 years 5 years 7 years 33% 20% 14% 45% 32% 25% 15% 19% 18% 7% 12% 12% 12% 9% o o AwN- 10 years 10% 18% 14% 12% 9% 5% 9% 8% 9% 7% 4% 6% o o 6% 6% 11 4% Totals 100% 100% 100% 100% *These percentages have been rounded to the nearest whole percent to simplify calculations while retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention
